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This book examines traditional insurance risks such as earthquakes, storms, terrorist attacks, and other disasters. It begins with a discussion of how the risk of such “acts of God and men” impact on our lives, health, and possessions. It then proceeds to introduce the statistical techniques necessary for analyzing these uncertainties. It explains that quantifying the risks that such disasters pose is difficult but that it is crucial for achieving the financing objectives of insurance. The book guides readers through the methods available for identifying and measuring such risks, financing their consequences, and forecasting their future behaviour (within the limits of science). It also considers the experience of risk from the perspectives of both policyholders and insurance companies, and compares their respective responses. The discussion of the risks inherent in the private insurance industry leads to a discussion of the government's role as both market regulator and potential “insurer of last resort.” The book concludes with an interdisciplinary investigation into the nature of uncertainty, incorporating ideas from physics, philosophy, and game theory to assess science's limitations in predicting the ramifications of risk.

This book assesses how learning helps countries grow, develop, and become more productive. It looks at what government can do to promote learning and casts light on the significance of learning for economic theory and policy. It explains that the thing that truly separates developed from less-developed countries is not just a gap in resources or output but a gap in knowledge. It shows that the pace at which developing countries grow is largely a function of the pace at which they close this knowledge gap. The book takes as its starting point Kenneth J. Arrow's 1962 paper “Learning by Doing,” and explains why the production of knowledge differs from that of other goods and why market economies alone typically do not produce and transmit knowledge efficiently. It shows that closing knowledge gaps and helping laggards learn are central steps to growth and development. It also argues that creating a learning society is crucial if we are to sustain improved living standards in advanced countries. It provides new models of “endogenous growth” and shows how well-designed government trade and industrial policies can help create a learning society, while poorly designed intellectual property regimes can retard learning. It also explains how virtually every government policy has effects, both positive and negative, on learning. It argues that free trade may lead to stagnation whereas broad-based industrial protection and exchange rate interventions may bring benefits—not just to the industrial sector, but to the entire economy.

This book revisits the causes of the 2008 global economic collapse, re-evaluating the international response to the crisis and suggesting more effective approaches to development cooperation. It explains how leading governments undertook extraordinary measures to offset the 2008 economic crisis, shoring up financial institutions, stimulating demand to reverse recession and rebalancing budgets to alleviate sovereign debt. The book argues that, while these measures were productive in and of themselves, they were effective because they were coordinated internationally and were matched with sweeping global financial reforms. The volume then shows that, unfortunately, international coordination has weakened after these initial steps. It therefore argues that one of the crisis' adverse effects will be a significant reduction in development cooperation. In response to this challenge, the book redesigns the international cooperation system and its governance, so that it can accept new actors and better achieve the Millennial Development Goals of 2015 within the context of a severe global crisis. Overall, the book provides an assessment of global economic imbalance and the potential of increased cooperation to rectify these inequalities.

This book offers innovative policy ideas and insightful commentary on the United States' pressing economic issues, such as global warming, the global economy, government spending, Social Security, tax reform, real estate, and political and social policy, including an extensive look at the economics of capital punishment, welfare reform, and the recent presidential elections. The book takes a hard look at the high cost of the Iraq War, and provides insight and advice on global warming. It demystifies Social Security and presents divergent views on the coming dollar crisis. The book reconsiders the impact of U.S. offshoring. It distinguishes what is “sense” and what is “nonsense” in discussions of federal deficits and debt, and points out the consequences of the deindustrialization of America. It further questions whether welfare reform was successful and explores the economic consequences of global warming and the rebuilding of New Orleans. The book describes how a simple switch in auto insurance policy could benefit the environment, and it unravels the dangers of an unchecked housing bubble and investigates the mishandling of the lending institutions Freddie Mac and Fannie Mae. Balancing empirical data with economic theory, the book proves that the unique perspective of the economist is a vital one for understanding today's world.

The Economists’ Voice: Top Economists Take On Today’s Problems featured a core collection of accessible, timely essays on the challenges facing today’s global markets and financial institutions. This book is the next installment in this series, gathering together the strongest essays published in The Economist’s Voice, a nonpartisan online journal, so that students and general readers can gain a deeper understanding of the financial developments shaping their world. The chapters tackle the plain economics and architecture of health care reform, its implications for society and the future of the health insurance industry, and the value of the health insurance subsidies and exchanges built into the law. The book considers the effects of financial regulatory reform, the possibilities for ratings reform, and the issue of limiting bankers’ pay. An objective examination of the financial crisis and bank bailouts results in two chapters on investment banking regulation after Bear Stearns and the positives and negatives of the Paulson/Bernanke bailout. The chapters weigh the merits of future rescues and suggest alternative strategies for addressing the next financial crisis. A final section examines a unique array of topics: the stability of pension security bonds; the value of a carbon tax, especially in fostering economic and environmental sustainability; the counterintuitive perils of net neutrality; the unforeseen consequences of government debt; the meaning of the Google book search settlement; and the unexploited possibilities for profit in NFL overtime games.

This book is about the complexities of economic policy and financial reform. Merging a compelling narrative with scholarly research, it begins with a systematic breakdown of the factors leading to America's recent recession, describing the monetary policy, tax practices, subprime mortgage scandals, and lax regulation that contributed to the crisis. The book also discusses the Treasury-Federal Reserve rescue deals that saved several financial institutions and the involvement of Congress in passing restorative policies. The book follows with an analysis of stress tests and other economic measures, and it assesses whether the U.S. economy is truly on the mend. It considers the prospects for recovery in North America as a whole, as well as in Europe, Asia, and South America, and the extent and value of U.S. and E.U. regulatory proposals. Refocusing on American financial practices, the book evaluates hedge funds and derivatives, credit default swaps, and rating agencies, pondering whether the dollar can remain a reserve currency. It concludes with a historical comparison of the Great Depression and the Great Recession, weighing the effect of the economic collapse on the future of American capitalism.

Essential resources do more than satisfy people’s needs. They ensure a dignified existence. Since the competition for essential resources, particularly fresh water and arable land, is increasing and standard legal institutions, such as property rights and national border controls, are strangling access to resources for some while delivering prosperity to others, many are searching for ways to ensure their fair distribution. This book argues that the division of essential resources ought to be governed by a combination of Voice and Reflexivity. Voice is the ability of social groups to choose the rules by which they are governed. Reflexivity is the opportunity to question one’s own preferences in light of competing claims and to accommodate them in a collective learning process. Having investigated the allocation of essential resources in places as varied as Cambodia, China, India, Kenya, Laos, Morocco, Nepal, the arid American West, and peri-urban areas in West Africa, the contributors to this volume largely concur with the viability of this policy and normative framework. Drawing on their expertise in law, environmental studies, anthropology, history, political science, and economics, they weigh the potential of Voice and Reflexivity against such alternatives as pricing mechanisms, property rights, common resource management, political might, or brute force.

Many believe economic growth is incompatible with ecological preservation. Green Capital challenges this argument by shifting our focus away from the scarcity of raw materials and toward the deterioration of the great natural regulatory functions (such as the climate system, the water cycle, and biodiversity). Although we can find substitutes for scarce natural resources, we cannot replace a natural regulatory system, which is incredibly complex. It is therefore critical that we introduce a new price into the economy that measures the costs of damage to these regulatory functions. This change in perspective justifies such innovations as the carbon tax, which addresses not the scarcity of carbon but the inability of the atmosphere to absorb large amounts of carbon without upsetting the climate system. Brokering a sustainable peace between ecology and the economy, Green Capital describes a range of valuation schemes and their contribution to the goals of green capitalism, proposing a new approach to natural resources that benefits both businesses and the environment.

This book provides a behind-the-scenes look at what companies in China, India, Japan, Korea, the Philippines, Indonesia, Hong Kong, Singapore, and Thailand are doing to build businesses that will lessen the environmental impact of Asia’s extraordinary economic growth. Dirty air, foul water, and hellishly overcrowded cities are threatening to choke the region’s impressive prosperity. Recognizing a business opportunity in solving social problems, Asian businesses have developed innovative responses to the region’s environmental crises. From solar and wind power technologies to green buildings, electric cars, water services, and sustainable tropical forestry, Asian corporations are upending old business models in their home countries and throughout the world. Companies have the money, the technology, and the people to act—yet support from the government (in the form of more effective, market-friendly policies) and the engagement of civil society are crucial for a region-wide shift to greener business practices. The book paints detailed profiles of what some of these companies are doing and includes a unique appendix that encapsulates the environmental business practices of more than fifty companies.

This volume connects the evolving modern financial systems of China, Japan, and Korea to the development and growth of their economies through the first decade of the twenty-first century. It also identifies the commonalities among all three systems while accounting for their social, political, and institutional differences. Chapters consider the reforms of the Chinese economy since 1978, the underwhelming performance of the Japanese economy since about 1990, and the growth of the Korean economy over the past three decades. These economies engaged in rapid catch-up growth processes and share similar economic structures. Yet while domestic forces have driven each country's financial trajectory, international short-term financial flows have presented opportunities and challenges for them all. The nature and role of the financial system in generating real economic growth, though nuanced and complex, is integral to these countries.